Custom, Excise & Service Tax Tribunal
M/S.Ellenbarrie Exim Ltd. vs C. C. Ex - Kol V on 16 October, 2019
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal No.193 of 2009
(Arising out of Order-in-Original No.37/COMMISSIONER/CE/KOL-V/ADJN/2008 dated
26.12.2008 passed by Commissioner of Central Excise, Kolkata-V.)
M/s.Ellenbarrie Exim Limited
(31, Shakespeare Sarani,
2nd Floor, Room No.205,
Kolkata-700017.)
...Appellant
VERSUS
Commissioner of Central Excise, Kolkata-V
.....Respondent
(180, Shanti Pally, Rajdanga Main Road, Kolkata-700107.) WITH Excise Appeal No.142 of 2009 (Arising out of Order-in-Original No.37/COMMISSIONER/CE/KOL-V/ADJN/2008 dated 26.12.2008 passed by Commissioner of Central Excise, Kolkata-V.) Commissioner of Central Excise, Kolkata-V (New Central Excise Building, 180, Shantipally, Rajdanga Main Road, Kolkata-700107.) ...Appellant VERSUS M/s.Ellenbarie Exim Ltd.
.....Respondent (20-Coal Berth, Coal Dock Road, Khidderpore, Kolkata-700088.) APPEARANCE Shri M.N.Dwiivedi, Advocate for the Appellant (s) Shri S.S.Chattopadhyay, Authorized Representative for the Revenue CORAM: HON'BLE SHRI P.K.CHOUDHARY, MEMBER(JUDICIAL) HON'BLE SHRI P.V. SUBBA RAO, MEMBER(TECHNICAL) FINAL ORDER NO. 76347-76348/2019 2 Excise Appeal No.193 of 2009 DATE OF HEARING : 24 June 2019 DATE OF DECISION : 16 October 2019 P.K.CHOUDHARY :
Since both the appeals have been filed against the Order-in-Original dated 26.12.2008 passed by the Ld. Commissioner of Central Excise, Kolkata, they are taken up together for disposal by this common order.
2. The facts of the case in brief are that the assessee M/s. Ellenbarrie Exim Limited, imported non-alloy steel wire rods and lead scrap radio/ re-
melted lead ingots under Duty Free Credit Entitlement (DFCE) certificates in terms of exemption notification no. 53/2003-Cus dated 01.04.2003. The said imported goods were used for manufacture of non-alloy steel wire and lead ingots respectively, through job work which were cleared on payment of central excise duty during the period 2005-06 by utilizing Cenvat Credit availed on countervailing duty amount as debited in the DFCE certificates. It is the case of the department that the assessee could adjust Cenvat Credit only w.e.f. 17.11.2005 when the amendment was made to the aforesaid notification no. 53/2003 vide notification no. 97/2005-cus dated 17.11.2005. In the course of adjudication of the impugned show cause notice dated 24.12.2007 issued to the assessee, the Ld. Commissioner confirmed the demand for recovery of Cenvat Credit of Rs. 42,01,397/- and Rs. 84,027/- (education cess) relating to four Bill of Entries filed prior to 17.11.2005 alongwith interest and equivalent penalty under Rule 15(1) of the CENVAT Credit Rules, 2004. Against the said demand, the assessee has preferred Appeal bearing no. E-193/2009.
Vide the aforesaid adjudication order, the Ld. Commissioner dropped the proposal in the show cause notice for denial of cenvat credit in respect of Bill of Entries filed in February 2006, i.e. after 17.11.2005 i.e. the date on which amendment was made in the notification no. 53/2003 referred supra. He also observed that the assessee was registered as manufacturer under Rule 9 of the Central Excise Rules, 2002, the question of requirement of supporting manufacturer did not arise. The Ld. Commissioner further observed that the assessee being a registered manufacturer was entitled to get the goods manufactured by job workers in terms of compliance under Notification no. 214/86-CE for which the jurisdictional Asst Commissioner has 3 Excise Appeal No.193 of 2009 given the end certificates. Based on the said observations, he found that there was no merit in the allegations made in the show cause notice that the assessee was required to declare the name of the supporting manufacturer or job worker since the assessee was himself a registered manufacturer during the period in dispute. Against this portion of the demand dropped by the Ld. Commissioner, the Revenue has preferred Appeal bearing no. E- 142/2009.
3. Sri V. N. Dwivedi, Advocate appeared for the assessee and Sri S. S. Chattopadhyay, A.R., appeared for the Revenue.
4. The Ld. Advocate appearing for the assessee submitted that the assessee is legally entitled to cenvat credit of countervailing duty. He referred to the Notification no. 6(RE-2005) 2004-2009 dated 04.06.2005 issued by the Govt of India, through DGFT, which provides that additional duty of customs paid in cash or through debit under DFCE Certificate shall be adjusted as Cenvat Credit or duty drawback as per the Rules framed by the Department of Revenue. He also relied on the Circular no. 27/2006-Cus dated 13.10.2006, regarding availment of CENVAT Credit of additional Customs Duty (CVD) paid through DFCE Scheme / Target Plus (TP) Scheme certificates, whereby the Department of Revenue has clarified that the Customs duty paid in cash or through the Debit in certificates issued under DFCE / TP Schemes can be availed as CENVAT credit or duty drawback. It is his submission that the said circular is clarificatory in nature and will be retrospectively applicable even though the amendment was made on 17.11.2005 vide Notification no. 97/2005 in the Notification no. 53/2005, the benefits of cenvat credit will be available for the prior period also. He relied on the decision of this Tribunal rendered in appellant's own case as decided vide Final Order no. 77250/2018 dated 18.07.2018 in Appeal no. E/82/2008- DB.
5. Supporting the impugned order to the extent demand is confirmed against the assessee, the Ld. AR appearing for the Revenue submitted that the assessee has violated the conditions of Notification no. 53/2005 by availing credit prior to 17.11.2005. He further referred to the grounds taken in the revenue's appeal that the assessee is not entitled to the benefit of Notification no. 53/2005-cus for the reason that names and addresses of the 4 Excise Appeal No.193 of 2009 supporting manufactures were not specified on the licence / certificate against which the impugned goods were imported. He also stated that since the goods were manufactured by job workers and that the assessee did not have manufacturing facility, the cenvat credit was not available even after 17.11.2005. He accordingly prayed that the entire demand proposed in the show cause notice be confirmed against the assessee.
6. Heard both sides and perused the appeal records.
7. We find that the issue pertaining to denial of cenvat credit for the period prior to 17.11.2005 i.e. prior to issuance of Notification no. 97/2005 stands squarely decided by this Tribunal in assessee's own case vide Final Order no. 77250/2018 dated 18.07.2018, the relevant portion of which is extracted below:-
"4. We find that on 01.04.2003, the Central Government, through the relevant exim policy 2002-07, introduced DFCE scheme to accelerate growth in exports by rewarding star export houses, who had achieved a quantum growth in exports and the appellant company having received the quantum growth was granted DFCE Certificate. By Notification No. 6(RE-2005)/2004-09 dated 4.6.2005 issued by the DGFT, New Delhi, Central Government, para 3.7.2.1. after notes 7 in the exim policy 2002-07 as amended which reads as follows:-
Note 8 : CENVAT/ Drawback : Additional Customs duty/excise duty paid in cash or through debit under the DFCE entitlement certificate shall be adjusted as CENVAT credit or Duty Drawback as per rules framed by the Department of Revenue.
5. On 17.11.2005, the Department of Revenue by its notification no.
97/2005-CUS dated 17.11.2005 amended Notification No. 53/2003- CUS dated 1.4.2003 in accordance with the provision of policy by inserting Condition No. 7 to allow Cenvat credit in respect of additional duty paid them DFCE Certificate. On 13.10.2006 the Department of Revenue by its Circular bearing No. 27/2006-CUS issued clarification regarding availment of CENVAT Credit of additional Customs Duty paid through DFCE Scheme/TP Scheme certificates whereby it was clarified that the additional Customs duty paid in cash or through debit in 5 Excise Appeal No.193 of 2009 certificates issued under DFCE/TP Scheme can be availed of as CENVAT credit or duty drawback under the existing Cenvat Credit Rules, 2004.
6. We observe that there is no dispute with regard to the amount of additional duty and education cess paid on the inputs. There is also no dispute regarding the receipt of the goods in the factory of the appellant and used in or in relation to the manufacture of final products, which were subsequently cleared on payment of Excise Duty. Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, provided that the Central Government may, from time to time, formulate and announce by Notification in the Official Gazette, the export and import policy and may also in the like manner, amend that policy. (upto above corrected)
7. In the aforesaid provisions of the aforesaid acts, the Central Government by appropriate notification formulate and announce the exim policy 2002-07 and amend the same. Para 3.7.2.1 of the policy provided for DPC scheme and it was amended by notification No. 6(RE)/05/04-09 dated 4.6.2005, whereby Note-8 was inserted, which provided that additional customs duty / excise duty paid in cash or through debit under the DFCE entitlement certificate, would be adjusted as Cenvat credit as per rules framed by the Department of Revenue. The Department of Revenue, by its circular dated 13,10.2006 clarified that Additional Customs Duties paid through debit in certificate issued under DFCE can be availed of as Cenvat credit. The relevant exim policy has a force of law and Adjudicating Authority should have considered the same before holding that Cenvat credit has to be availed and utilized on this strength of notification issued by CBEC. We also observe that the appellant has acted on the basis of and in terms of the notification issued by the Central Government through Ministry of Commerce and the appellant should not be penalized for the delay in issuing the customs notification in line or re- confirming and/or complementing the Notification issued by the DGFT. The CBEC was expected to re-confirm and/or complement issued by the DGFT simultaneously. However, the Customs notification came to be issued on 17.11.2005. In the mean time, the appellant paid 6 Excise Appeal No.193 of 2009 additional customs duty through debit through DGFT and availed in part the Cenvat credit. CBEC through its clarification clarified that additional customs duty paid by debit should be payable as Cenvat credit. Such clarification came before passing of the impugned order. In our considered opinion the Notification dated 17.11.2005 amending the basic Notification 53/2003 is a classificatory Notification and should be applied from the date of DGFT Notification.
8. In view of the above dissuasion, benefit of credit should not be denied......"
8. We also note that in an identical case in CCE Mumbai vs. Lupin Industries Ltd 2018 (363) ELT 1088 (Tri-Mum) where the proceeding was dropped by the original and first appellate authorities, the co-ordinate Bench of Tribunal rejecting the department's appeal observed that -
"3. The original authority dropped those proceedings on the ground that Circular No. 27/2006-Cus., dated 13th October 2006 of Central Board of Excise & Customs rendered the amendment of 2005 to be retrospective. Against this disposal, the adjudicating authority was directed to file an appeal seeking denial of credit availed on imports effected against Notification No. 54/2003, dated 1st March, 2003 as the amending notification did not incorporate reference in this notification. The first appellate authority held that the claim of Revenue of prospective application of the amendment should have manifested itself in a prayer for disallowing the entire credit pertaining to the period before 17th November, 2005. Affirming the decision of lower authority, the impugned order holds that duty credit is permissible as Notification No. 54/2003 was available only to service providers, that respondent had the benefit of Notification No. 53/2003 intended for manufacturers and was covered by the amending notification of 2005 as well as retrospective effect of the circular.
4. Heard Learned Authorized Representative and Learned Counsel for respondent. The case of Revenue before first appellate authority was 7 Excise Appeal No.193 of 2009 limited to the credit availed on imports effected against Notification No. 54/2003 and the scope of further appeal is limited to that claim. Though respondent has submitted the circumstances in which the bills of entry carried the wrong notification, failure on their part to seek amendment of such wrong citation of notification renders that submission to be untenable. The submission of Learned Authorized Representative that privileges are to be strictly interpreted does not find much merit as the notifications impugned in this proceeding are procedural and not substantive. These notifications provide for an alternative mode of discharging duty liability after regular assessment in accordance with law.
5. The principle to be determined is the impact of availment of credit when duty liability is discharged by recourse to alternative mode. That there is a duty liability is not in dispute; it is the manner of payment of the duty that, in the context of entitlement to Cenvat credit, that is objected to. Cenvat Credit Rules, 2004 does not make such distinction and credit should be admissible even in the absence of a clarificatory insertion in a customs notification. That the said insertion is clarificatory should be important from the context of the placement of what is otherwise an aspect of domestic taxation in an instrument of a tax statute concerned with cross-border movement of commodities. Customs Act, 1962 does not purport to be dealt with Cenvat credit.
6. Respondent is an exporter and is, thereby, entitled to a refund of taxes/duties on all inputs and it is the superfluous activity of collecting the additional duty for subsequent refund that would be the consequence of the proposition made on behalf of Revenue. Such procedural burden should not be visited lightly upon an exporter if the Government is serious about promotion of exports.
7. Two lower authorities have elaborated the reasons for allowing credit. Adequate justification for discarding the findings of these two authorities are not evident in the appeal.
8. For the above reasons, the appeal of Revenue is without merit and is dismissed."8 Excise Appeal No.193 of 2009
Following the settled legal position as above, we hold that the assessee is entitled to avail credit for the period prior to 17.11.2005.
9. We further note that in the instant proceedings, the objection of the Revenue is that the assessee has violated condition no. 7 of Notf no. 53/2003 (supra), inserted on 17.11.2005 vide Notf. 97/2005 (supra) by availing cenvat credit of additional duty against the amount debited in the certificate prior to the said date. On perusal of the amended notification, it would be evident that exemption from payment of customs duty would be available provided that all the seven conditions contained in the notification are complied by the assessee. In the event it is assumed that condition no. 7 (as inserted by amending notification) is not fulfilled by the assessee, the very exemption from payment of specified customs duty provided by the subject notf 53/2005 could not have been made available to the assessee. It is noted that in the present case, the authorities have not disputed the customs exemption claimed by the assessee and therefore, it is not open to the authorities to dispute the availment of cenvat credit which is otherwise available in terms of the CENVAT Credit Rules, 2004, as also clarified vide circular dated 13.10.2006.
10. In a similar case where the cenvat credit of SAD amount credit was sought to be denied to the assessee, which was paid by the assessee through DFCE licence, the Tribunal in Tecumseh Products India Pvt Ltd. vs. CCE Hyderabad 2010 (256) ELT 276 (Tri-Bang) has held that the assessee was legally eligible for cenvat credit. The relevant portion of the order is extracted below:-
"5. Ld. DR on the other hand would submit that the payment of SAD by the appellant by debit through DFCE/DEPB licence is not eligible as a Cenvat credit. He would rely upon the Board's Circular No. 20/2006- Cus. dated21-7-2006 (relied upon by the adjudicating authority in the Order-in-Original) to submit that only CVD is allowed to be debited on the DFCE scheme and not SAD. As regard Notification No. 54/2003- Cus. as amended, it is his submission that the said Notification clearly indicate that the SAD leviable under subsection (1) of Section 3 of the Customs Tariff Act is only allowed to be debited under DFCE scheme. He would reiterate the findings of the adjudicating authority.9 Excise Appeal No.193 of 2009
6. We have considered the submissions made by both sides and perused the records. The issue involved in this case is regarding the eligibility to avail Cenvat credit of the amount of SAD paid as debit in DFCE licence.It is undisputed that as per Rule 3 of the Cenvat Credit Rules, any duty paid under Section 3 of the Customs Tariff Act is eligible to an assessee as Cenvat credit.This point is not contested. It is also undisputed that the appellant in this case has paid the SAD by a debit in the DFCE licence and there was enough credit in the said licence issued under DFCE scheme, for debit the SAD leviable on the goods. The adjudicating authority's findings for denying the Cenvat credit is as under :-
"11. The assessee has imported goods under Notification No. 53/2003-Cus. dated 1-4-2003 and the SAD payable has been debited against the DFCE certificates. In view of the clarification given as above, the special CVD or SAD at the rate of 4% could not be debited against the DFCE scrips. They were required to pay the special CVD/SAD in cash and thereafter, were entitled for Cenvat credit. Inasmuch as, the assessee has not paid SAD in cash on the imported goods, they are not entitled to take Cenvat credit."
It can be seen from the above reproduced portion of the Order-in- Original that the adjudicating authority has come to the conclusion that the appellant could not have debited the SAD under DFCE licence as per the Board's circular dated 21-7-2006. It is undisputed in this case that the goods were imported and the amounts were debited in the licence during the period June, 2006 to March, 2007 and till today the Customs authorities have not issued any show cause notice nor there is any direction from the authorities to the appellant that they have to pay such amount in cash. In the absence of any such direction from the Customs authorities, it does not lie in the hand of the Central Excise authorities to hold that the appellant could not have debited the amount under notification. Any liability of short payment of Customs duty by debiting the DFCE licence, the demand should have to be raised by the appropriate authorities. Having not done so, it has to be held that the appellant has paid the 4% SAD. If the appellant has paid 10 Excise Appeal No.193 of 2009 the 4% SAD as leviable under Section 3 of the Customs Tariff Act, the eligibility to avail credit is allowed by Cenvat Credit Rules and also under the relevant notifications. Relevant notification No. 53/2003- Cus., dated 1-4-2003 clearly indicates that the assessee is eligible to avail Cenvat credit of the duty paid under Section 3 of the Customs Tariff Act and identical words are there in Cenvat Credit Rules.
7. In view of the foregoing reasonings, we are of the considered view that the impugned order denying the Cenvat credit to the appellant is incorrect and is liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any. As the impugned order is set aside on merits itself, the question of imposition of penalty does not arise at all, as is prayed in the appeal filed by Revenue. In sum, the appeal of the assessee is allowed and the appeal of the Revenue is rejected."
11. In view of the above discussions, we are of the considered view that the assessee is eligible for credit of the countervailing duty paid through debit in the DFCE certificates even prior to 17.11.2005. In so far as the grounds taken by the Revenue in their appeal, there is no merit in their contention inasmuch as the assessee was a registered manufacturer and there is no need to incorporate the name of supporting manufacturer as has rightly been observed by the Ld. Commissioner.
The appeal filed by the assessee is therefore allowed with consequential relief as per law. The appeal filed by the department is rejected.
(Order pronounced in the open court on 16 October 2019.) SD/ (P.K.CHOUDHARY) MEMBER (JUDICIAL) SD/ (P.V. SUBBA RAO) MEMBER (TECHNICAL) sm